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Essay 3: Contradictions or shared goals? Empirical perspectives on ramp-up management

1. Introduction

The swift and efficiency with which new products are developed and introduced into large- volume production is an important influence on competitiveness in manufacturing (Hatch &

Mowery, 1998). The assumed failures of many organizations to manage product development effectively have been frequently cited as a critical contributor to deteriorating firm competitiveness (Dertouzos, Lester, & Solow, 1988). Many industries experience the pressure from strong competitors, investors and technology progresses calling for shorter product lifecycle. Ramping-up new products quicker is essential when considering the cost of R&D, supply chain, distribution and marketing of every new product making a transition into full-scale production. In addition to great potential harvesting first-mover advantages (Franco, Sarkar, Agarwal, & Echambadi, 2009), successful Ramp-up reduces time to payback and improves accounting measures such as return on investments (ROI) and return on assets (ROA). Additionally, lower variable cost is achieved through lower level of material scrap and better utilization of idle time.

The premise of this paper is that managing the tail of New Product Development (NPD), that being the interface between NPD and the full scale production is important; not only how this phase is carefully executed effects the success of the throughput time, but also it also signifies greatly the efficiency and productivity of the firm.

1.1. A Model of ramp-up process characteristics – a disciplinary significance

Early research focuses on the ramp-up process from a NPD perspective (Eppinger & Ulrich, 2015; Marquis, 1969; Wheelwright & Clark, 1992), but most literature stems from operations research and manufacturing perspectives (Becker, Stolletz, Stablein, & Stäblein, 2016; Byun, 2016;

Kremsmayr, Dronhofer, Mitterer, & Ramsauer, 2016; Linder, Anand, Falk, & Schmitt, 2016).

However heterogeneous these two disciplinary perspectives are, they offer interesting and insightful studies into the ramp-up process. In fact, there are institutional differences between them, that might often be contradictory, which affects the way the ramp-up management concept is studied. This paper suggests that ramp-up field not only having a functional engineering role but also social and managerial dimensions, because having such a holistic construct of the field permits for an illustration of dynamics of social science in the pursuit of engineers as either subordinates or decision-makers.

While the ramp-up process can be illustrated as the interface between NPD and production,

without differentiating its disciplinary affiliation, this paper aims for an encompassed affiliation and addressing this tension through an empirical field study. How the ramp-up process is managed and executed will influence successful machine stabilization and the generation of valuable knowledge at the ramp-up sites; both the product and process technology will have to be developed and adjusted during the phase of ramp-up.

1.2. A review of related literature

New product is the launching of production from when the process is scaled up from zero to full-volume production, fulfilling some predefined indicators of cost and quality. This definition of Wheelwright and Clark (1992): “In ramp-up the firm starts commercial production at a relatively low level of volume; as the organization develops confidence in its (and its suppliers’ abilities to execute production consistently and marketing’s abilities to sell the product, the volume increases.

At the conclusion of the ramp-up phase, the production system has achieved its target levels of volume, cost, and quality.” (Wheelwright & Clark, 1992, p. 8).

There is a prevailing lack of agreement on the terminologies assigned to classifying the ramp-up phase, which could further diversify the field of research. Carefully examining the related literature, our discoveries reveal a range of expressions employed to labelling the activities that occur during this phase. Ramp-up has been referred to as ‘manufacturing scale-up’ from NPD perspectives (Meyer, 2007), ‘product launch’ is the phase where the product debuts for production in a manufacturing plant (Gopal et al., 2013). ‘Initial commercial manufacturing’(Langowitz, 1988), ‘production launch’ (Gross, 2014; Neumann & Medbo, 2016; L Surbier, Alpan, & Blanco, 2010), ‘R&D/production interface’ (Säfsten, Lakemond, Johansson, & Magnusson, 2006), ‘rapid prototyping’ (Sommer, Hedegaard, Dukovska-Popovska, & Steger-Jensen, 2015), and ‘new-product introduction’ (Cantamessa & Valentini, 2000), which should not be misinterpreted as

‘market launch’(Robert G Cooper, 1988), because through four experiments, the paper deals with initial manufacturing capacity planning and strategizing for fluctuating demands. Clark and Fujimoto (1991) provided a detailed empirical analysis of product development processes from the automotive industry, their impact on product development performance and their divergent use across multiple regions. Clark and Fujimoto referred to this practice they called “integrated problem solving”; by observing companies targeting short time- to-market combined intensive knowledge transfer with processes overlap, which came to be referred to as concurrent engineering.

In exploring the critical interface between NPD and mass production, some papers have identified the complexity of Ramp-up management (Clark & Fujimoto, 1991; Clawson, 1985; Langowitz,

1988; Pisano & Wheelwright, 1995). Although there are studies from different industries, the limited number of research has been carried out in the automobile industry, and is mostly focused on defining the constructs, describing the observed patterns of empirical evidence and referring to earlier literature. While construct definitions are important, they are insufficient in ensuring the understanding of the unique functional relationships among concepts of ramp-up (Thomas, Cuervo-Cazurra, & Brannen, 2011).

When addressing the productivity phenomena, previous studies tend to focus on full- scale production processes. For instance, the study of Lieberman (1990) showed that improving productivity is possible through more efficient labour utilization. Another study by MacDuffie, Sethuraman and Fisher (1996) demonstrated the negative effect found in increased complexity of parts in production and manufacturing productivity. A higher variability in automotive options has a negative impact on productivity (Fisher & Ittner, 1999). When analysing volume flexibility a recent study shows that production can occur at above/below capacity when responding to realized demand (Goyal & Netessine, 2011). Furthermore, launching product at a flexibility manufacturing setting, might recover lost productivity (ibid). A recent study from 64 automobile plants in the United States over a ten-year period shows that even severe weather conditions hamper plant productivity (Cachon, Gallino, & Olivares, 2011). Clark and Fujimoto (1991) demonstrated that introduction of new products to the normal factory operations results in productivity drop during the ramp-up phase. In their study, they state that the initial production “…is often a period of confusion. Productivity dives, the defect rates soar, scrap and rework mount, machines break down, lines stop, and engineers and supervisors run to fix problems” (Clark & Fujimoto, 1991, p. 198).

Roger Schmenner’s recent paper on productivity (2015) highlights the critical role of effective operations management, and proposes the theory of Swift Even Flow as a framework for dealing with productivity issues. Throughout this paper, he presents a pantheon of innovators in operations management and specifies only two factors essential in gaining productivity: (1) reducing variation, and here variation of quantities, quality and timing. (2) to reduce the throughput time as much as possible. Schmenner suggests that companies should aim at eliminating the nonvalue- added aspects of production, which is where the cost and inefficiencies lie (Schmenner, 2015, p. 345).

The cohesions of this body of literature is the identified elements that seem to matter in studying the ramp-up process, such as the product development process and the contingencies manufacturing firms are operating under.

This paper is set to identify the barriers towards the operations of the ramp-up process and

identifying how these barriers are manifested. In principal, what is it about the relationship between barriers that such as product design and time-to-volume that will prolong the time span of the process. It is important to expand the existing knowledge with a managerial explanation on how these elements are related and/or integrated.

1.3. Research aim and scope

This study focuses on new product and process development projects within a single company. This study contributes to the literature on innovation management which reports on innovation at the level of a specific industry or an entire company (Krishnan & Ulrich, 2001). This paper is a direct response to the call for additional studies into the analysis of effects of process interruptions and defects during the ramp-up process, made recently by Glock and Grosse (2015).

It is important to understand the approach of the study being that of concurrent knowledge development within the participating company and the academic setting in a parallel setup throughout the research period: the case company focuses on problem-solving issues while getting help from the researcher. The researcher is then looking at the issues while acquiring observations and other data from the company. Thereby, what emerge out of this set-up are the following research questions: (1) What are the patterns and barriers shaping ramp-up flow in the case organization? (2) How are these barriers affecting the process handover from R&D and Engineering to production plants? The findings from the current study will generate hypothesis intended for future studies.